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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: NOW who wrote (221045)	9/17/2009 9:40:03 AM
From: ChanceIs	Read Replies (1) \| Respond to of 306849

On Debt, Stimulus, Taleb, and Enron. The scales just suddenly fell from my eyes. Taleb is very insightful about debt. So is Martenson if you ever sat through his online "Quick Course." Debt is a claim upon the fruits/proceeds of future labor. It has to be paid back with interest. Its OK if you spend it against a business venture through which you have a well reasoned expectation of success. To buy a flat-screen TV?!?!?!?!? You have shot yourself in the foot, and eaten your seed corn. (Eaten your children as well??? Some species do that.) Most now agree that the various "stimuli" do nothing but bring consumption forward. All of the car companies offered 0% financing post 9/11. Now they can't sell cars. This summer (I exaggerate) they sold cars to the government and gave them to J6P. That can't go on long. I don't think this point needs further clarification. So look at what we have done. We pulled supply forward through debt, and pulled demand forward through stimulus. We mark it to market and proclaim GDP rising. Now for what was Enron famous, or should I say infamous. Amongst many other positions, Enron would buy natural gas futures - say three years out - and sell electricity futures of the same duration. They would find a generator (or virtual generator) to spin the gas into electricity. Knowing the "spark spread," (the profit made between gas price and electricity price), they had a locked in profit. This is all fine and good business practice. What did they do then? They booked the entire profit as today's earnings. This was aggressive but legal - in part because of manic lobbying of Ken Lay - and many others - about the time Glass-Stegal was annihilated. The alternative accounting was accrual - or basically booking the profits in the quarter they were actually realized. BTW: This is a classic case of when cash flow and profits don't match, you should get the hell out of Dodge. Sooooooo. Any comparison when Enron and today?? We are certainly bringing everything (supply and demand) forward to today. We are certainly booking them today as GDP and equivalently corporate profits - think revenue growth at the car makers. The accounting is not insignificant. What is much worse is that sooner or later, the "spread maker" runs out of margin or collateral. Enron and you and I do. How many call spreads can we write or buy before our brokers send a margin call? Isn't it the same case with the Chinese extending (margin) credit to the US??? When Nixon had borrowed too much to fund Viet-Nam, he quipped "We are all keynsians now. That phrase has been borrowed a lot recently to include, "We are all Madoff now." Sooooo. Have we become that which we so eschewed??? We are all Enron now??? I think Ihave made the case. Except I don't count moi with Congress' embrace of Enronesque financial management and accounting. But I and many others here will be the babies thrown out with the collective bathwater. A#^holes!!!!! Ancient Chinese curse..."May you live in interesting times." Hmmm. The irony of the nationality of that curse just hit me square between the eyes.

To: NOW who wrote (221045)	9/17/2009 1:09:36 PM
From: LTK007	Respond to of 306849

Big Picture Rundown, One Man's Opinion, mine:) i include SOME sources that i listen to and consider ****************************************** Joe Saluzzi,who wants to short this market LT, but has not done so YET, and warns, it is still DANGEROUS to short. He sees no hope until the end of October,and then he must get a signal. He calls this the rally that will be hated in time , when it is finally EXPOSED as a clasic madness rally, ilike that remark:)---i myself believe this rally is near a perfect MATCH of MASSIVE "Happy Days are Here Again" of 50% rally of 1930.(HDAHA,was a Hit Song in the spring of 1930) Squawk Boxes/WS are meticulously lying on the SPX P/E ---i will state i know the P/E is now around 130-1(those that don't believe that, be my guest, i stand BEHIND that number, and offer up Mish and Swenlin for documentation---i have no intention of arguing this once again ,and to prove my point) Thus the SPX P/E is 300% higher than anytime in Market history. The majority of this rally has been driven by long-side MOMO TRADERS that intend to sell their equities and flip short side at t a certain moment. That the selling has been including LT-"Buy and Hold"--that are nervous about future and in relief they have recouped a fair amount. But i warn, the psychological moment where LT thinkers that have been on the sidelines ,in significant amount, can't stand the pain of making nothing, has come,and the sideliners have been now moving in , these people will form the biggest part of feeding the move to top, and they will be hurt the worst. Myself, i have seen the topside of Rising Wedge broken,unless there is a rapid plunging sell down, a dive bombing sell down in the next 2 to three trading days, the break of Rising Wedge is quite bullish for an insane last blow out move.By that i mean a MEAN sell down that shatters 1010 area. i now consider 1160SPX as possible top(even 1250 possible)---and think 1095 is ultra likely. Perma Bull Fischer of Forbes Magazine, is now in BULL FEVER HEAT, he states this rally is a new massive secular Bull like that started in 1982and it will be up and up trending for like 20 years--i believe those that believe Fischer will end up with their 'head on a platter',and i consider Fischer a pompous a--hole shill. Disclaimer: i am neutral,i hold but one stock. But i do intend to short the hellout of this market at some point, but it is NOT now In My Humble Opinion, we all are 'tea leaves readers', no?:) As a caution too shorts i repeat this counsel writing from the The Spear Report, written on 9/15. The Spear Report themselves believe we going to have a prolonged L-shape recovery and we will eventually go well below 666 IN TIME. Faber argues that we are still a year to 18 months away from entering a new crash due to the Ponzi Scheme NOW being run by the United States Government , does have legs. But he does say their could be 20% sell-off at anytime in that period. Me,i think we could have an exogenous event, that could make this crashing occur at anytime, but i do NOT calculate by the exogenous events---just say this factor is real. The Spear Reort counsel to savvy traders that have been moving in to short, by trying to Pick the Top** The Spear Report on 9/15 "Anecdotally, we hear that individual active traders are very involved in trying to pick the top. In serial top picking, each bit of weakness is amplified by a trader's imagination into the fantasy of an avalanche of selling. The would-be top picker imagines the thrill of riding the wave of selling (via short positions) down into the pit of investor despair. Psychologically, however, serial top pickers are naturally skeptical people who tend to miss out on rallies. Top picking then becomes a clandestine exercise in self-justification for missing out via the rationalization of sour grapes. Top picking was rampant in the first few months of the year 2000 and it cost several bearish hedge funds their shirts. Instead of top picking, try to think like a fund manager. Your goal is to at least match your fund's performance to your benchmark index. If you fall behind, you will lose your lucrative job. It’s all about going with the flow in order to keep up with the Dow Jones. Your performance is rated quarterly, so fund managers will be buying dips with the herd at least until the end of Q3, and perhaps through the end of the year." end post Max